The Coffee God

COMMODITY WATCH

Coffee prices are likely to rise by 50 per cent.

The time ahead will change many things. One of the things it can change is create new symbols and revitalise the old ones. For example, the erstwhile poor man of 1991 is now the empowered emerging middle class and he might have forgotten thanking God for his 'bread and butter', but with the way we see things, he will definitely be forced to pause and think about his Barista Coffee and the sugar he will add.

Guys, your coffee mug is about to triple in price, twice because of the underlying commodity and one time because of the sugar in it. Well some readers might find it unreasonable. But how reasonable is it that the Sensex has more than quadrupled on price while your coffee mug continues to pleasure you?

At Or-phe-us we are 'soft' (coffee, sugar, cocoa) bulls. We initiated our coverage on coffee on Oct 3. Coffee just like sugar ended its multi-decade supercycle bear IV wave in July 2002. The commodity is in a multi-year bull market. We have given a complete count perspective since 1972, detailing the count till the last intermediate wave.

Currently, the soft seems to be moving in a IV primary circle. And is now churning up in a (D) intermediate wave up to near 120 cents a pound. The sideways action should continue for some time before coffee starts the V primary up to 180 cents.

From our recommendation price at near 100 in October, the commodity moved up to near 122. A 22% rise on spot is just a small glimpse of what lies ahead. Our current recommendation is positive on coffee and for sugar, support levels at 10 cents a pound should hold.

The time is changing, so thank 'The Coffee God' before you sip your coffee and put an extra lump of sugar. A better strategy might be to diversify from technology to 'softs'. This way you can not only crush your coffee but savour it too.

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Contributed by Orpheus Capitals (or-phe-us.com), a global alternative research company